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On Hurwicz Preferences in Psychological Games

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The literature on strategic ambiguity in classical games provides generalized notions of equilibrium in which each player best responds to ambiguous or imprecise beliefs about hisopponents’ strategy choices. In a recent paper, strategic ambiguity has been extended topsychological games, by taking into account ambiguous hierarchies of beliefs and maxmin preferences. Given that this kind of preference seems too restrictive as a general method to evaluate decisions, in this paper we extend the analysis by taking into account a-maxmin preferences in which decisions are evaluated by a convex combination of the worst-case (with weight a) and the best-case (with weight 1-a) scenarios. We give the definition of a-maxmin Psychological Nash Equilibrium; an illustrative example shows that the set of equilibria is affected by the parameter a and the larger is ambiguity the greater is the effect. We also provide a result of stability of the equilibria with respect to perturbations that involve the attitudes toward ambiguity, the structure of ambiguity and the payoff functions: converging sequences of equilibria of perturbed games converge to equilibria of the unperturbed game as the perturbation vanishes. Surprisingly, a final example shows that existence of equilibria is not guaranteed for every value of a.

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  • Giuseppe De Marco & Maria Romaniello & Alba Roviello, 2022. "On Hurwicz Preferences in Psychological Games," CSEF Working Papers 659, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  • Handle: RePEc:sef:csefwp:659
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    1. Giuseppe De Marco & Maria Romaniello & Alba Roviello, 2025. "Guilt Aversion and Ambiguity in the Battle of Sexes Game," Mathematics, MDPI, vol. 13(10), pages 1-30, May.

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    Keywords

    Psychological games; ambiguous beliefs; a-MEU; equilibrium existence.;
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